The association that represents more than 11,000 Canadian mortgage professionals says that Ottawa’s policies have harmed the housing market.
In its annual State of the Mortgage Market report, Mortgage Professionals Canada says that the federal government’s efforts to cool rising home prices and demand has created cascading consequences and pressures.
“We are seeing downward trends and/or depressions in areas like the resale market, the outlook on employment in the housing construction sector, and a continued decline in rental vacancy rates,” said Paul Taylor, President and CEO of Mortgage Professionals Canada. “Federal policy changes are disqualifying potential first-time homebuyers and creating immense pressures on the rental market which is in turn driving rental prices higher. It is a spiralling problem.”
Taylor says that MPC continues to support the aim of ensuring that mortgage borrowers are able to make future payments but he says changes to the existing rules should be made.
“Our report illustrates that a more reasonable stress test level and lending restriction reforms are now needed to strike a better balance for borrowers and policymakers, improving housing affordability and Canada’s economy,” he said.
The report, available in full at mortgageproscan.ca, highlights that when improper levers are used, the housing market continues to be depressed, leading to wider impacts.
“While the government has been focused on borrowers and interest rates, the reduction of activity in the housing market and extremely low rental vacancy rates will impact not only costs to first-time homebuyers and all renters, but also impact employment and the overall economy,” explained Will Dunning, Chief Economist for Mortgage Professionals Canada and author of the report. “As a result of these policies, the economy will be weaker than it needs to be.”